Natural Weekly Price Outlook – Natural Gas Continues Recovery

Natural Gas Weekly Technical Analysis

The natural gas market rallied significantly during the week to reach the $3.50 level, but it has given back some of those gains. I think at this point in time it’s worth noting that we rolled over to the November contract, which means that we should start to price in more demand. With that being said, on the daily chart it’s a little bit clearer as to what’s going on, and it looks like we are trying to pull back a bit.

It would not be a huge surprise for me at all to see this market pull back closer to the $3 level, maybe $3.20, where traders will get involved and start looking for value. After all, demand is going to pick up. And once it does, the price of natural gas probably goes looking closer to the $4 level. November, of course, is the beginning of the colder parts of the year. And of course, it’s followed by December, which is even colder.

So, demand should be picking up in the United States and Northern Europe, and that should help with pricing. I like the idea of buying dips here, and it looks clear to me that we are in the midst of a trend change after selling off for several months, like you would expect. Now, we also have to ask questions about what will happen with natural gas pricing now that the Europeans are scheduled to buy quite a bit more from America.

Remember, this is the Henry Hubb contract, meaning it comes out of Louisiana. This is a US product. If the Europeans are in fact going to be involved in buying more natural gas, then it puts more pressure upward on the price of gas. I have no interest in shorting. I like the idea of buying dips and I do think we will get to the $4 level over the next couple of months.

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